Record Profits For Exxon 10.7 B

[Kidlicious]

I don't read your posts KH.

[KrazyHorse]

That's because you're a whiner with no real ideas other than a sense of victimisation.

[Imran Siddiqui]

Originally posted by KrazyHorse
I did it again. Damnit, when will I learn?

The net importers could band together and set a price ceiling, but that would be against the free market and the world order. The powers that rule don't want that because they collect all this profit.

How idiotic is this? THERE'S NOT ENOUGH SUPPLY AT A LOWER PRICE TO FILL DEMAND AT THAT PRICE. Oil producers will stop drilling for oil which costs them more to extract than they can sell it for. This will mean a gap between available supply and demand, leading to a SHORTAGE.

And then you wonder how Kid is studying economics. He must have had a hard time in basic microeconomics. Those supply and demand charts are tough stuff!

[Odin]

Jesus Christ, Kid doesn't know high school level-economics and he's an economist?

[Dauphin]

He's a wannabe accountant IIRC.

It will intersting to see what he does when it comes to financial planning for companies or wealthy individuals he wants to represent or work for.

[Kidlicious]

Originally posted by Imran Siddiqui
And then you wonder how Kid is studying economics. He must have had a hard time in basic microeconomics. Those supply and demand charts are tough stuff!

It's very simple. There's a limit to what can be produced in the short run. When you reach that limit you get windfall profits. The supply curve goes straight up. If you set the price lower in this case there is no shortage. In high school your teacher just showed you a demand curve that was slanted, because he didn't want to confuse you. Now I can see why.

[Imran Siddiqui]

You think we are at a limit of what can be produced?

[Fake Boris]

Originally posted by Flubber


IN 1998 demand was much lower and oil hit $12. Profits were in the toilet, downsizing was the order of the day and prospects looked grim.

Anyone doing forecasting before making a 10 billion dollar expenditure has to recall that. The industry is not always booming . . . as for the good profits now . . . Isn't that the way the market works to reward those that choose wisely to invest in producing a product which has an increasing price??

How is that a reply to anything I said?

[Kidlicious]

Originally posted by Imran Siddiqui


You think we are at a limit of what can be produced?

No. I think we are close enough to the limit that very little more oil is produced for ever increasing price increases. Which means yes there would be a very small, insignificant, shortage if the price were artificially set at say $50 a barrel.

[Imran Siddiqui]

In this world there is no such thing as a "small, insignifcant" shortage for oil. Being in the South after Katrina cut off the pipes and rumors of shortages came through, I know how people react to those rumblings. People will fill up all their cars and drums in one day, turning a 'small' shortage into a massive one.

And it isn't like this country would be able to respond well to any shortage in oil.

[Dauphin]

If the supply curve is vertical price is set by demand. If you artificially lower prices how do you plan to ration the supply?

[Kidlicious]

Originally posted by Imran Siddiqui
In this world there is no such thing as a "small, insignifcant" shortage for oil. Being in the South after Katrina cut off the pipes and rumors of shortages came through, I know how people react to those rumblings. People will fill up all their cars and drums in one day, turning a 'small' shortage into a massive one.

And it isn't like this country would be able to respond well to any shortage in oil.

A small shortage of oil has the same effect as a price increase. Consumers respong the same way.

[Spiffor]

Originally posted by KrazyHorse
How idiotic is this? THERE'S NOT ENOUGH SUPPLY AT A LOWER PRICE TO FILL DEMAND AT THAT PRICE. Oil producers will stop drilling for oil which costs them more to extract than they can sell it for. This will mean a gap between available supply and demand, leading to a SHORTAGE.

The oil prices have risen by about 50% between 2004 and 2006 (source). Do you think it is because the production costs have risen by the same amount at the same time? If so, how would you explain the record profits?

We are clearly witnessing a situation where increased demand didn't result in an immediate increase of supply (what with oil infrastructure being long and costly to build, as seen with Exxon in Alberta), and the demanders are competing for a rare resource, with price being the discriminating factor between the have-oils and the have-not-oils.

If the demanders agreed on a lower price (say, the 2004 prices), it might stifle the industry's willingness to invest in oil fields that would be costly to exploit. But it would not lessen their willingness to produce oil with the fields that were already existing and profitable in 2004.

Oh, and the shortage is already there, but only the poor suffer from it.

[Imran Siddiqui]

Originally posted by Kidicious
A small shortage of oil has the same effect as a price increase. Consumers respong the same way.

Yeah, um... I've seen how people react to price increases and how they replied to small shortages. There were no lines at gas stations, with consumers holding drums to fill with gas, for price increases.

[Spiffor]

Originally posted by Odin
Jesus Christ, Kid doesn't know high school level-economics and he's an economist?

High-school level economics are simplistic.